Construction Intelligence

Our Middle East experts present latest data and intelligence about local trends for the construction industry.

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The Middle East countries that have performed well in previous years continue to prosper, though, these are mainly in the Gulf. Gulf Cooperation Council (GCC) economies have been growing at an impressive rate over the past decade, with a combined Gross Domestic Product (GDP) exceeding US$1.5trillion in 2012, largely due to a number of construction projects that had been on hold resuming in 2012.

Though recovery of the commercial real estate sector remains somewhat subdued, new opportunities are emerging in residential, hospitality, retail and education sectors; albeit at a cautious and regulated pace.

The value of new construction projects in the GCC is also expected to rise...

Saudi Arabia is a big projects market and continues to dominate the region’s economy. In the United Arab Emirates (UAE), Dubai has established itself as a transport and logistics hub, while oil drives Abu Dhabi’s growth. Qatar is a small economy but is growing fast, with a deadline of hosting the Fifa World Cup in 2022. Oman is slowly growing in economic stature, rising gradually to meet its potential.

Building projects worth more than US$68.7bn were completed in the GCC in 2012, according to a MEED report, compared to US$46.5bn in the previous year. The report also forecast a further 19 percent sector growth in 2013, with completed construction projects set to reach US$81.6bn.

The value of new construction projects in the GCC is also expected to rise in 2013, with projects valued at US$64.5bn set to be awarded to contractors over the coming 12 months. This figure represents a sharp increase, up by a third (33%), on the value of projects awarded in 2012 (US$48.4bn).

In 2012, residential, commercial and hospitality sectors led the GCC projects market with US$29.4bn, US$12.2bn and US$5.5bn worth of projects completed respectively. Education, medical and retail sectors were other significant contributors, with completed projects worth US$5.2bn, US$3.3bn and US$2.4bn.

Residential building projects will remain the largest segment of the real estate market in terms of projects expected to complete in 2013...

The report added that in 2013, a two-paced growth is likely with residential, retail and commercial sector construction projects growing at slower rates of 4.4 percent, 4 percent and 13 percent to US$30.7bn, US$2.5bn and US$13.8bn respectively. However, hospitality, educational and medical projects are predicted to grow at faster rates of 27 percent, 69 percent and 79 percent respectively to US$7.0bn, US$8.8bn and US$5.9bn.

Residential building projects will remain the largest segment of the real estate market in terms of projects expected to complete in 2013 with a market share of 38 percent. Commercial will remain the second largest real estate sector with 17 percent but educational is set to overtake the hospitality construction segment and claim third place.

The GCC interior contracting and fit-out market in 2012 was US$7.86bn – an increase of 56 percent against the 2011 figure of US$5.04bn and is expected to rise by 17 percent in 2013 to US$9.2bn. In 2012, the UAE was once again the largest interiors and fit-out market in the GCC and, at US$2.83bn, made up 36 percent of the US$7.86bn GCC market. It was followed by the Saudi Arabia and Qatar which were valued at US$2.6bn and US$1.49bn respectively. The Kuwait interiors and fit-out market was valued at US$472m, Oman’s at US$314m and Bahrain’s at US$157m.